[laughter] therethere are no shortage of pn the white house, and i carry one around for an emergency, just in case. this is not acceptable, to hold middle class tax cuts hostage simply because they don't want tax rates on upper income folks to go up. right? that doesn't make sense. megyn: but some house republicans are describing the latest offer from the white house as absurd. they say the president ran on a platform to raise rates on top earners. that would amount to about $800 billion in new tax revenue they say he's now asking for double that amount, close to $1.6

trillion in new taxes. republicans also argue he calls for a balanced approach but asking for about four times as much in tax hikes as there are in possible spending cuts, all of which on the spending cut front would come later: possible spending cuts, all of which on the spending confront will come later. he also wants to permanently do away with the congress approves debt limit, effectively giving himself a blank check to add as much the sequence to a national debt that already stands at $16 trillion. moments ago, speaker of the house speaker boehner saying that the democrats plan is not going to fly. >> the white house took three weeks to respond with any kind of a proposal, much to my disappointment. it was not a serious one. megyn: tom bevan is the editor of real clear politics.com. it seems that even left-leaning

pundits and analysts admit that this is not a serious proposal by the white house and it is clear that the democrats and president obama cannot could not believe that the republicans would agree to this. so what is going on here? >> well, that's a great question. we are doing this kabuki dance now. obama put this proposal out there so that republicans would have a chance to negotiate with him. he started with this outrageous proposal and look at what we have been able to negotiate. $1.6 trillion in tax increases down to under a trillion dollars. something like that. but there is other thinking that the president simply is not serious -- but he that he wants to go over the cliff and force in 2013, early 2013, put forward after tax rates go up on everyone -- turn around and proposed tax propose tax cuts for those making $250,000 or less p year. and voting against tax cuts for

the middle-class. it depends on where you said as to how you see these negotiations playing out right now. megyn: but the white house has maintained in private even to progressive groups, but it does not want to go out thecal cliff. if you believe that? >> it's hard to imagine that the president would want to send the economy into another recession. that would be a terrible start to his second term and it would cripple the rest of the spectrum. everything else that he would want to do. it would seem a bit suicidal to do that. that being said, there is a scenario where he thinks that he might be able to quickly turn around and get tax cuts back in place. it depends on how much you think going over the fiscal cliff will affect the economy. others say it will be devastating and others say it will be back. it depends on where you stand when you are making these sort of analyses. megyn: it feels like we are left with the economy -- with

people's livelihoods and growth in the country and salaries and unemployment benefits. we are just left. both sides are accusing the other of being the untethered risk taker. last night speaker boehner made remarks demanding leadership on the president. here he is. >> this is not a game. jobs are on the line. the american economy is on the line. this is a moment for adults leadership. megyn: is there a political risk to the president? is there a political risk to him in looking a little too bashful little too smart, as they say, when it comes to this game? >> sure, there are political risks all around for both sides. he saw the president today. he has been doing this and will be doing more of it. trying to clean outside game and put pressure on and make the

public put pressure on members of congress to deal with that. and to back his proposal. which she thinks the election gave him a mandate to do that. there are political risks all across the board. there is no telling who will get when or how this will shake out. megyn: the polls say that the republicans will get blamed. the polls say that the majority of americans will blame the house republicans. it is not clear whether the house republicans care what they say -- the big answer to the folks in their districts. nonetheless, do they stand blameless even right now? they are pointing at the president, saying that this proposal is not serious. it is stuff that they couldn't get through the chemically democratically controlled senate. so the lesson to saying it is the republican part holding cell. on the other hand, have the

republicans come forward with anything thus far that is a proposed spending cut? >> i think that the republicans are looking for a piece of acquaintance who come into the equation. republicans have agreed to a certain amount of revenues. the president hasn't come forward with spending cuts at all. he offered $400 billion out of medicare in this initial round. to be named later. they are sort of determined not to fall for that again. megyn: it is exactly what happened to ronald reagan. he agreed to a tax hike for spending cuts or come later. he said that the biggest regret of his presidency is that he got the tax hike and he never got the spending cuts. we will see. there is a lot of pressure on the sides, especially on the gop side. tom bevan, thank you so much you

think you. megyn: what do you think? some say it is the opening offer. but it's not. we only have 3.5 weeks ago. it is time to get down to business on capitol hill, who is to blame for the situation we are on on capitol hill? balmy on twitter. back in january 2000 and 1, our national debt stood at $5.7 trillion when president bush took office. it seems paltry now. when he left office, the debt was $10.6 trillion. as of this week, $16.3 trillion. the next debt ceiling limit is only about $100 billion away. that is the number we could reach in the next few weeks. democrats are suggesting that that be dealt with in this difficult negotiation. we have doing conferences.

we just heard from speaker boehner a short time ago and now we are waiting for house minority leader nancy closely to take to the stage. just a couple of minutes from now. she's trying to drum up support for the president's fiscal plan as he hits the road with his message today. we will bring you that news as it happens. also in washington, a couple of lawmakers are starting to raise concerns about ambassador susan rice and her possible nomination to the position of secretary of state. two republicans raising red flags after a series of meetings with ambassador rice on capitol hill. they are claiming that she had full access to all the intelligence on the 9/11 attack and then got the come libya. before she went out and inaccurately blamed that deadly ambush on a grand protest. which now we know never happened, over an anti-muslim film. catherine herridge has the latest in washington. reporter: thank you, megyn. good afternoon. the briefings on capitol hill

two weeks ago, lawmakers stressing that ambassador rice had access to unclassified intelligence coming including the classified information. a leading republican tells fox at the classified information included the president's daily briefings. it contained the most classified intelligence, and in this case, compelling evidence of al qaeda's involvement in the benghazi attack. susan collins spoke to fox about this. >> she had access to the full presidential daily briefs on intelligence. so she was well-informed. she knew that are intelligence -- our intelligence knew that al qaeda was involved in the attacks were not also, a militia sympathetic to al qaeda dismissed the attacks, and they say that al sharia should've

been given great credibility. republican lawmakers accused the administration of also putting down this data. >> remember that al sharia was reported to our into the attack itself, claiming responsibility on social media. that is something we should have been pursuing right at the get go. reporter: supporting rice, democrats assess that there was no demonstration, given that the fbi had first-hand accounts from her own diplomatic security agents were at the consulate at that time. they had that information as early as october 14, two days before rice's appearance on the talk shows. megyn: catherine herridge, thank you so much. >> you are welcome. megyn: you've heard the dueling arguments over what exactly is in the latest white house plan for dealing with the so-called fiscal cliff. today, senator john cornyn tells us what happened inside of a

meeting between the treasury secretary and a senate budget committee. and what the treasury secretary told the gop behind closed doors. senator john cornyn is not happy. and you can feel the rage. hurricane sandy and the eruption at fema officials. ahead of the holiday season. we will update you coming up next. and a cartoon snake comes the new face of a 2 trillion-dollar pension nightmare. we will tell you which state could be collapsing under the weight of its own promises, and whether you'll come in the u.s. taxpayer, could be footing the bill for a government bailout that you probably don't realize. >> so the pool of money is smaller. the demand on a pool of money leaves the current workers to ask whether there will be enough when they are able to retire. the problem is the squeeze.

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megyn: we are keeping a close eye on cairo, egypt, after they have drafted a constitution with lots of references to islamic sharia law. in cairo, tens of thousands protested, denouncing president mohammed morsi. in an all-night session of parliament dominated by islamic. opposition groups say that the document has a clear view towards sharia law. raising fears of state enforced islamic moral code. the draft is expected to be delivered to president morsi tomorrow. new controversy today over a pension crisis running the state of illinois. and whether american taxpayers

and all the other states may soon have to put their bill. according to the pew research center, illinois has the most underfunded public pension system in the entire country. the funding ratio of just 45%. 45% funded. estimated $95 billion short of where they need to be to pay out the promised pension. a problem that pat quinn says needs to be fixed to find a solution. it is harder to come by. here is a video that we just released. the governor squeezing the pension python. >> sometimes they make smaller payments than what they promise. the investments that we made with that pension fund, the great recession can hit us hard. plus people are retiring earlier and living longer and the cost

of health care for retirees has soared. the pool of money is smaller. while the demand on the pool of money is great. weaving the current workers to ask whether there will be enough in the fund when they are ready to retire. the problem is the squeeze. megyn: really? really? joining me now is kristina rasmussen. executive vice president of the illinois policy institute. they describe themselves as dedicated to ensuring personal freedom. squeezing the python snake. the pension python snake. the orange pension python snake. this is the solution? >> yes, if this is the best the government can offer up, then we are in trouble than what we thought. the snake is the laughingstock of the midwest. what is disturbing is that this

website that was put together has done nothing by way of solutions. megyn: in honor of "squeezy", i did wear this orange python built today. [laughter] i am laughing because i can't cry about this. at least not on national television. you are telling me that the pensions are $200 billion in pension debt. and there is 97 billion in unpaid obligations. and the governor comes out with himself and the commercial with an orange snake named "squeezy" and offers no solutions and won't shoot down the idea of asking the feds to bail him out of this jam? >> that is probably what is most disturbing. everyone acknowledges that illinois has a huge problem of unfunded pension liabilities. the numbers are really big. what is scary is that he refuses to take the idea of a federal bailout of debt off the table.

taxpayers and responsible states like wisconsin and virginia will be asked about things here in illinois when we are not taking the lead to fix it ourselves. megyn: is there any chance of that actually happening? is there any chance that somehow the governor manages to get a bill out from his friends in washington? >> unfortunately, it is all too real possibility. every day that the politicians in illinois dither, the system becomes more unstable and unfunded. in recent years, when we have institutions that are supposedly too big to fail, the federal government loves to run and then have a bailout. state pensions, it's a problem in illinois, but really it is a problem nationwide. we are talking about liabilities between 2 trillion, upwards of $4.5 trillion. i would say that that is probably too big to fail by way of most politics calculations. megyn: you know, we talked about

this many times on the show. what happens is the politicians negotiate deals with the unions. the politicians tend to be put in their jobs by the unions. unions get what they want. even if the state cannot deliver when it's time to actually pay out the pensions. that is a situation in which illinois finds that while in great, but they can't pay the bill. they don't have the money. so these people are either going to get shafted on the promise, or maybe the federal taxpayer will get shafted. recently in illinois, correct me if i'm wrong, they went to the illinois taxpayers and height to their income taxes. >> you are right. in the beginning of 2011, they passed an increase across the state. that cost each family one week's pay and all the money from that tax hike was to make the pension payment. so you have struggling, lower income and middle class family

paying more to the government so they can prop of the million or pensions of government workers. they basically have been sold allies about retirement security that may not be there when they are ready to leave the workforce. megyn: now they are talking about making that temporary income tax hike permanent. there are rumblings about thaas. illinois has dirty heads credit downgraded by standard & poor's. because of these retiree costs. they are in a lot of trouble. was that pat quinn in the video? >> no, i think that was a local actor. they did not put him in the video considering the feedback that the video has received. megyn: well, good old "squeezy" makes is going after all. christina, thank you for joining us. >> you are so welcome.

megyn: coming up, a town hall meeting turns ugly. some frustrated victims of hurricane sandy. can they get answers as the holiday seasons approach? and the winner of this week's record-breaking jackpot in the powerball game. still a mystery to millions of americans. coming up, the identity of one of the players and surveillance video suggests a second may be coming soon. [ female announcer ] the humana walmart-preferred rx plan p-d-p gives you a low $18.50 monthly plan premium... and select generic hypertension drugs available for only a penny... so you can focus on what really matters. call humana at 1-800-808-4003.

megyn: outrage taking center stage at a hurricane sandy recovery meeting in new york. victims in staten island interrupting the q&a session. it has been more than a month since hurricane sandy devastated the community. many residents were sleeping in their cars and braving the

temperatures here. we have more from a fox affiliate wnyw. reporter: scott mcgrath, his anger was clear. he was one of many people at this packed meeting. a meeting that quickly became a shouting match. [cheers] [inaudible conversations] reporter: the president who organized the meeting tried to keep order. it was supposed to ask questions written on cards. but that changed when people shouted from the floor, frustrated that the questions were not being answered. >> the air quality is bad and what can you do about it? >> this gentleman has been living in a tent.

it was set up by the midland avenue neighborhood believed. >> we cannot go anywhere. i don't know what's going on or. reporter: nakoula the same question. she said that her new home with the story that. >> our communities are helping. red cross comes by. we help each other. that's what we want to do, but we need your support, sir. reporter: the new york city officials tried to answer the questions or at least give residents solace that staten island would be back. >> we just don't come back. we want to come back stronger than ever. do you know why? because we are a family and my community. megyn: that was jon heady john heady reporting for our fox affiliate, wnyw. we are expecting some much-needed help. we are to have some pictures of

a secret santa visiting new york and new jersey, giving crisp 100-dollar bills to those in need. many storm victims breaking into tears as the man stuff the cash into their hands. the anonymous philanthropist from missouri plans to give away $100,000 this holiday season. he says it's not about the money. his mission is to inspire others to commit random acts of kindness. consider that. you heard that story today. did you hear the story about the new york city cop and the homeless guy and the boots? he saw his exposed feet in the cold weather here? think about it. what if we all just pause and give something. is washington tries to head up a series of tax hikes, what has congress eliminating one of the legal limits on federal spending?

you know, that nasty debt ceiling? they want to get rid of that. what is the implications of killing the debt ceiling? that is coming up next. and cosmetic enhancements versus improvements. classroom improvements. as a the teachers union plans to keep a teachers union that pays for their micro suction. it is taxpayer funded liposuction. in a school district where 60% of the students fail to graduate. ♪ ♪ [music playing] ♪ ♪ [ male announcer ] are you considering a new medicare plan?

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megyn: a fox news alert on our top story. what now appears to be stalled negotiations between republicans and democrats on tax hikes and spending cuts. after the white house delivered with the gop called a plan that is just not serious. one of the issues -- this is trying to head off the automatic tax hikes and spending cuts that we are going to get at the end of this year. now the sides are trying to work something out. but oh, what a mess. the latest issue is that the white house has added a new wrinkle into the already stalled negotiations. congress' role in raising the debt ceiling, you know, if we want to raise it, we have to go to congress and ask for permission.

the president obama would like to ask for a blank check to add as much to the national debt as president obama sees fit. in the meantime, we are expecting to hear from nancy pelosi. each side is speaking out every night and every day. moments ago, speaker of the house john boehner said this. >> the white house spent three weeks trying to develop a proposal. they call for $1.6 trillion in new taxes. calling for not even $400 billion in cuts, and they want to have this extra spending that is actually greater than the amount that we would cut. i mean, it is not a serious proposal. so right now we are almost nowhere. megyn: alan colmes and lars larson are with us now.

let's just focus on this debt ceiling. the reason we find ourselves about to go off the fiscal cliff with the automatic spending cuts, in part is because back in 2011, they wanted to raise the debt ceiling and the republicans said you cannot do it unless we do spending cuts. we cannot just do deficit spending. so they agree, they cut this deal, now the democrats are going to the republicans and saying, forget that. let's just in the position to get rid of it. what on earth would make them think that republicans would agree to that? >> because the president thinks he has a mandate from the whole country. he thinks he can get anything he wants. i am sure that alan colmes loves this idea. here are the problems. the congress has the authority

to authorize the debt. they also have the authority to authorize the bill that pays the debt. so now the president wants to take that away. this guy has shown a tendency to say that i don't need congress. i can pass laws with a stroke of a pen on executive orders. he doesn't need the supreme court because he declares laws unconstitutional, like doma. he says he wants an unlimited credit card, and you all will have to pay the bill. we have a debt ceiling, as much as people anguish over it, we need to have a conversation about what we are spending and why. will this be a problem if the president followed through on his 2008 comments to cut the deficit in half? no. he but he is not only not cut the deficit in half, he has actually proposed $1.6 trillion in new taxes. it is the kind of thing only alan colmes would love.

>> so much for that. >> he didn't declare doma -- [talking over each other] [talking over each other] megyn: the defense of marriage act which defines it as between a man and woman. >> all right, let me get your point. i agree with you. i don't think the president should have sole authority to raise the debt ceiling. megyn: oh really? >> cannot just be, please? i don't want the next president have that same problem of power. i think that should be something worked out of congress. during the george w. bush administration, the debt ceiling

was raised 19 times. the same republicans had a problem when president obama wanted to do it had no problem when they wanted to do it. one of their own wanted to do it. please let me finish. it is because of what the republicans did last time this came out. moody's lowered the bond rating of this country. megyn: just because you have a few drinks and get really tipsy, it doesn't mean that you should have 10 more and fall off the bus. [talking over each other] >> 19 times during the bush administration. megyn: so this should be for infinity? >> that is a double standard. >> b1 could be that we now have $16 trillion in debt? [talking over each other] [talking over each other] megyn: so they have to keep agreeing to the debt ceiling? otherwise they are hypocrites? >> megyn, the fact is that a lot

of us conservatives did object to the spending and his lack of the killing and foolish spending. i thought president bush was a great president, but he spent too much money. a lot of us said at the time. [talking over each other] >> we thought he was spending too much money. megyn: all right, let lars larson make his point. >> i did vote for him, but i thought he spent too much money. megyn: okay come you keep interrupting. you say to you do object to president obama wanting a carte blanche power. and we have these, you know, these checks and balances. in the city worry about what would happen if we had a republican president. do you feel the same way about the mood in the senate to eliminate the filibuster for many things? >> now, as a matter of fact. >> sorry to interrupt, but harry reid interrupted his position on that. it's better for everybody. the way they want to change it,

the junior senator from oregon, talking about restrictions in place to make sure that the minority party was protected. there is a way to deal with it that makes a lot of sense. megyn: that is interesting. i would like to finish up with this. the republicans are saying that this is not serious. and mitch mcconnell says this is highly responsible. it is not only focusing on reducing the deficit, it is adding more spending. it has a stimulus bill there -- $50 billion of stimulus. the republicans trying to cut spending and the democrats proposing the increase of it. is this likely to get resolved? >> it's almost december. >> megyn, it is likely to get resolved in a way that is ridiculous and ugly and isn't going to do the country any good. unfortunately, i am confident that they are going to do

something. it will be a crazy plan that increases taxes before the first of the year, as the president wants, and keeps them the same for the middle class. i guess if you define middle-class is up to 250,000. >> the problem if it does not address entitlement reform. it doesn't address the fact that we spend a trillion dollars a year on welfare. megyn: but what is the republican proposal for spending? >> i haven't seen one. >> what the democrats want to do is not -- [talking over each other] [talking over each other] megyn: go ahead. >> the republicans have proposed cuts. the president doesn't want to go there. the president believes he has this under control because the country gave him a mandate. he didn't win by that much. half the country is just below 50%. megyn: you are not answering the question. >> you tell me whether it's true or not but neither party has proposed any significant

spending. >> actually the president did support last term a number of cuts. >> the republicans would not agree to its. megyn: how many votes did the president's proposed budget at? >> i understand that they didn't get votes. but that doesn't mean there wasn't a proposal. megyn: allen, you don't help your site when you argue like this. you have to be honest. the democrats in the senate didn't have the courage to pass it. what makes you think they were telling me that? >> the fact is that the president -- obama in the white house versus congress. the president had a proposal in congress did not listen to it. megyn: $16 trillion of debt -- [talking over each other] [talking over each other] >> let's not forget that the current proposal is a starting point for negotiation and it was republicans who come a couple of years ago, rejected any cuts at

all as long as there were tax increases. megyn: we got nothing. that's what we got. all right, guys, thank you. >> thank you. thank you, megyn. megyn: we also have nancy pelosi that is speaking right now, let's take a listen. >> we have to make cuts. in order to get there from here, in terms of reducing the deficit, we must have revenue. we thank the president for his leadership. also for calling upon the table to get this job done and the president has the confidence that we are there to pass this when he comes to agreement. again, first and foremost, we hope that we would be able to schedule be in contact that from

next week. again, the election have consequences. the president made it very clear -- he made it very clear that he was supporting tax cuts to the middle class. that he wanted the expiration of the tax cuts for the high-end. that the american people know that debate when they voted for him. even more people support that you look at the polls of the subject. it is overwhelming for repeal of the high-end tax cuts to reduce the deficit. would that come i will take any questions to madam, leader, the response to the list instantaneous. mr. cantor just said that they are not going to raise rates. i know your response to that. whether you think in giving not, would he we think that process stands? >> let me just say that there

are three elements to this. growth, reduction in spending, and raising the revenues. we have already voted -- the democratic party voted for over $1 trillion in cuts in spending. that was part of the budget control act, and that is part of how we should go forward. you cannot speak about reducing the deficit without talking about raising revenue. i think the president has taken his message to the american people. and i hope that the republicans will listen to them. but i know one thing for sure. but the republican caucus, i'm reluctant to speak, usually i don't -- but many of the members want to say that they are ready to vote for middle-income tax cuts. then we can read the subject of race and all the rest of that

for next year when we do simplification of fairness and closing loopholes in lowering rates -- whatever we would do under tax reform in the package. >> have any of those republicans -- have they said to you that they would be in this type of position? >> no. >> last year, i believe it was, you embrace the idea of redefining wealth as a middle ground. making it a million dollars or more. is that something that you still feel? megyn: there you see nancy pelosi saying that elections have consequences. the president ran on raising taxes on the rich and not on the middle class and he has a mandate to do that. this has been the democratic position all along. the republicans ran on opposing those things and reelected two. that helps explain the standoff

that we are seeing right now. this is the same group of people that could not get this done twice before. is it any wonder that they are meeting meeting with the same results when the glut of the third time? okay, we will continue to follow it. as we get another fox news alert, breaking developments on the fatal shooting at a u.s. college campus that may have involved a crossbow were some kind of weapon. a lockdown has been lifted after the incident at wyoming's catholic community college. that left three people dead. the attack occurred after some kind of confrontation between a faculty member in a student. other students say security guards ordered that they evacuate, saying that this is not a drill. suspect a suspect is in custody, but it is unclear as to whether that person had an accomplice. we will have more on that ahead. the growing controversy over stories we have been following here.

unions a teachers union fighting to preserve a decade-old health care plan that covers cosmetic surgery and makes the taxpayers pay for it. all this while the district struggles. a new report showing that in just one year they spent nearly $3 million in taxpayer dollars on procedures like hair removal and liposuction. joining me now is juan fernandez, vice president of executive affairs of the buffalo, new york, school board. welcome to the program. this is happening in buffalo. the good news is that has gone down. it was $9 million on hair removal and liposuction and all these other procedures. a couple of years ago. then it dropped to 5.9 million. why shouldn't the citizens of buffalo payette? >> well, what i think we have to talk about is reassurance from leadership of the unions. it is entirely a mixup of

collective bargaining agreements. it is not an issue that we are dealing with. hopefully beyond the next collective bargaining agreement. megyn: what about 2009 and 2010 and 2011? why was this not renegotiated before? buffalo is struggling and they probably don't want to pay $9 million for the liposuction of their teachers and in the school district were only half the kids are graduating. >> i agree that 100%. most of us would like to see the money in the classroom. it is part of the collective bargaining and it is part of the contractual agreement. megyn: so going back in oh, 2009, 2010 --

>> no, they have been part of the school system for another 20 years. it is now time to get to the point where not only pressure from the community and others -- but the board has been very tough on him with regards to cutting loose and this money could be spent in the class -- classrooms. megyn: given the budget constraints -- if we give up the cosmetic surgery of the union plan -- but they give it up -- they refuse to save the jobs they wanted the liposuction one. >> yes, that is correct. we did approach the unions last year and the year before that. he even filed resolutions with the board, asking them for negotiations. not necessarily eliminating the writer completely, but giving us

some relief for about a year or two and for such a time as the collective bargaining agreement. that was unfortunately turned it down. now we need just a word of their commitment. megyn: we will continue to follow this. good luck, sir. up next, one of the winners of the powerball.

megyn: we are learning more about the two lucky winners of the record powerball jackpot. a half a billion dollars. one couple, the other said to be possibly a man caught on surveillance tape the moment he appears to realize that he has become a multimillionaire.

mike tobin in chicago. reporter: let's start with a couple in missouri, now that the mystery is over. 52-year-old mark hill and his family came forward to say they invested $10 or five random pics and realized they were the big winners. by now, they are trying to make sense of everything and the only person that seems to know what she wants to buy, their 6-year-old adopted daughter wants a pony. >> we are stunned by what has happened. it is surreal. people keep people keep asking us, we'll people keep asking us, we'll be going to buy with a? i haven't even thought about that. i just want to go home and be back to normal. reporter: out of maryland, we finally have video of someone behaving the way any of us would behave if he you won the lottery jackpot. watch the video of a guy in a yellow road croupier. he realizes that he has the matching numbers and he starts freaking out.

he starts showing the tickets to other people in the store, making sure that he wasn't seeing things, and he was doing the end zone dance only are the store. the winning ticket was sold in scottsdale, arizona. if that's the guy from he has to make it all the way into the sun state. megyn: what a moment. all right, thank you. unique moments and the gop on a deal to head off a series of automatic tax hikes and senator john cornyn talks about what happened inside a closed-door meeting between a treasury secretary and the senate budget committee. he did not go well. in a heartwarming moment between a homeless man and an nypd cop is immortalized in the photo. what a great story this is. it is everywhere, and for good reason. how one man's vow to protect and serve meant going beyond giving someone the shirt off his back.

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megyn: fox news alert on three big events. welcome to a brand-new hour of "america live." the house speaker and the minority leader holding dueling press conferences, each saying they are willing to compromise on a deal that would prevent the tax hikes from going into effect at the end of the year. here is house speaker john boehner. >> there is a stalemate. let's not kid ourselves. i'm not trying to make this more difficult. if you watched meet last three weeks i have been guard in what i have to say. i don't want to make it harder

for me other president or members of both parties to find common ground. megyn: ed henry is live at the white house with more. >> the president said at this event at a toy factory in the philadelphia area that he misses campaigning out on the road and this gave him an opportunity to do just that. he's not here in washington sitting down at a table trying to work thing out with republican leaders. he believes he needs to go out to the american people, sell his plan. a few moments ago nancy pelosi said elections have consequences. so the president's message was it's time to pressure republicans to agree to tax hikes for the rich. take a listen. >> it's not acceptable to me and i don't think it's acceptable to you for a handful of republicans in congress to hold middle class tax cuts hostage because they don't want tax rates on upper

income folks to go up. that doesn't make sense. >> reporter: republican leaders have different view of how these talks are going. when tim geithner presented the propose. , mcconnell laughed out loud. john boehner believes they are going nowhere fast. their frustration is the president campaigned on raising taxes of $800 billion and the proposal yesterday was $1.6 billion in taxes, but there is also new spending, about $50 billion. john boehner teed off on that. >> the white house spent three weeks trying to develop a proposal and they sent one up here that calls for $1.6 trillion in new taxes. calls for not even $400 billion in cuts, and they want to have this extra spending that's

actually greater and the amount they are willing to cut. it's different was not a serious proposal. >> reporter: boehner saying he stuck his neck out the day after the elect when he said he would put tax revenues on the table. he believes there is very little progress on the white house side in terms of spending cuts. so the boehner position is until the white house puts more spending cuts on the table he's not ready to kit a deal. the white house position is you have got to move forward on this tax position and we'll deal with spending cuts later. they don't believe those spending cuts will materialize if there is only one part to this deal. megyn: what's going on up there? >> reporter: i think they are putting a little ribbon trying to get in the holiday spirit. the president says he's keeping

a list of who's naughty and who's nice. megyn: they call him the santa claus president. but in any event he was using tonight a different way. the white house looking very beautiful. thanks, ed. there is new information about the senate budget committees reaction. this is the proposal that was scoffed at when it was first unveiled. the senate minority lead i are mitch mcconnell actually burst into laughter upon hearing the president's plan. texas senator john cornyn joins us now. welcome back to the program. geithner couples on capitol hill to meet with you. is this the plan he put forward? >> yes. secretary geithner can't close this deal. this is one the president

himself needs to be engaged in. as you point out he is continuing his campaign. he needs to come back to washington and sit down with john boehner and mitch mcconnell and take this off the table. no one in their right mind would be so irresponsible as to threat on take the american people off this fiscal cliff. plunge us back into recession and put a lot of people out of work. so this is very disappointing. and i wish we weren't where we are, but it takes two parties to negotiate in good faith and frankly the president has been awol. megyn: do you believe the president want to go off the fiscal cliff? >> by judging from his behavior, i'm beginning to believe he does. and that i think would be a profoundy irresponsible act. economists of all stripes have told us we'll be plunged into a recession. we don't know in light of this fragile economy whether it would be a small dip or whether it

would spiral out of control. so it's just something we should not be toying with. that's why it's so discouraging to see the president and secretary geithner increase their demand and not come closer together given the fact our side has put revenue on the table, something we don't want to do. we know we don't have just a taxing problem, we have a spending problem and we see no commensurate action from the president or his party dealing with the big problem that confront the country, particularly the unsustainable medicare and social security spending. megyn: the president is not proposing -- he's proposing no spending cuts. he says later you can talk about a $400 billion savings that -- entitlement policies he proposed in his last budget that didn't get any votes in favor of it even from democrats in the senate. but he is at least putting that out there. the $400 billion in savings he

couldn't get through before. what are you putting out? what are the proposed spending cuts the republicans want? >> i'm not surprised my col teague senator mcconnell laughed at this proposal. we have seen this before where we are asked for spending now and we'll take care of the cuts next year. it doesn't happen. and we know that that' not a serious proposal. so it doesn't call for, i think, us to negotiate against ourselves. what we need is realistic ways to sustain and preserve medicare and social security for future generations. megyn: you want him to come up with it? >> yes, we do. we proposed the budget pastr passed last year in the house. the president hasn't had a budget that passed the senate for almost four years now. we feel like we have gone the extra mile by putting revenue on

the table. we would like to see the president embrace the recommendations of his own bipartisan fiscal commission simpson-bowles. there are a lot of good ideas out there. but the president is still on the campaign trail and doesn't appear to be serious about averting this fiscal cliff cop the end of the year. megyn: some posit the president may want to go off the fiscal cliff because then we all get tax hikes. the so-called rich get tax hikes. then he will say tax hikes have gone up for everybody. so now you have got to agree to lower taxes on the middle class and you wouldn't be blamed with failing to stop them from going up on the rich. at that point how could you say no? >> it's not that simple because part of this equation involves things like the sequestration which goes into effect in january. $1.2 trillion in cuts in federal

spending begin with the fiscal cliff will put us in a recession. then we have got the debt ceiling limit which is mid-february, early march. we need to wrap all of this up into a common sense bipartisan grand bargain. just game this out by saying we are going to dive off the fiscal cliff, putting americans out of work, damage our economy or putting us in a recession or worse is profoundly irresponsible. megyn: what do you make of his request to cut congress out with respect to the debt limit. your thoughts on that? >> it's outrageous it's like say we maxed out our credit card so i'm going to get a new credit card with no limit so i can keep spending. there needs to be some accountability here. so far we are spending 42 cents out of every dollar in washington in borrowed money. that's money our kid and

grandkids are going to have to pay back. that's a crazy idea. and i'm amazed at secretary geithner had the courage to float that yesterday hence the laughter from senator mcconnell. i think that's the kind of response it deserved. megyn: the president want tax rates to be hiked on the rich. the republicans said we don't want that. we'll talk about eliminating deductions and loop holes but we don't want to raise rates. are you sensing any wafering on the gop side on that issue? >> i have not. we are not willing to raise rates because there are a lot of small businesses that pay business income on a flow-through basis on an individual tax return. that would discourage them from growing their business and repress economic recovery. we think that's a bad idea. many economists back us up on that. megyn: it will be an interesting

december. senator cornyn, thank you so much. new reports that the obama administration could get more involved in syria by supplying weapons to the rebels. this despite evidence that's arms going into syria are going to the hard line extremists and people who hate america. we'll explain how that happening and why there is such risk in our next possible move. colonel ralph peters is next. four women in the military have filed a lawsuit to forechange the rules for women in combat. can a judge change the longstanding policy? we'll debate it in "kelly's court." a random act of kindness caught on camera. today we hear from the new york police officer who is being celebrated across the country. >> it was extremely cold that night. you see this gentleman. i offered to buy him a pair of

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♪ and aids... ♪ aids is going to lose. aids is going to lose. ♪ megyn: reports a shooting on a u.s. college campus, this one in maryland. a suspect in custody after a shooting at morgan state university in baltimore. an adult male was shot but this injuries are not life-threatening. it's not known if the victim other suspect were students there. this is the second shooting on that campus since september. we are reading reports that the united states is considering getting more involved in the now civil war in syria that has killed thousands and thousands of innocent men, women and children. the "new york times" reporting

that the obama administration is considering providing arms directly to some government opposition fighters, weapons which could include anti-aircraft technology. in particular across the border in turkey. but there is evidence that weapons like automatic rifles funneled through turkey have gone to hard line islamic jihadists. these are not fans of america. and not opposition groups support about it west. should we do this? and how can we know where the arms we may ship may land? joining me, ralph peters. welcome back. this is so dicey. syria is so dicey. they are literally torturing and murdering children and babies. and the united states -- the world's super power has done very little. there has been pressure on them to do more but is getting involved in direct arms shipment

the answer? >> the answer is leading from behind doesn't work. among the many mistakes the obama admin made was outsourcing our regional security policy to saudi arabia and qatar. our supposed allies. saudi arabia and qatar are islamic states. so when they sent in arms to syria, guess where the arms went? they went to the islamic factions. when this revolution started, it was overwhelmingly liberal in the old-fashioned sense, secular, oriented. not confessional. and just wanted to get rid of the horrible dictatorship. the islamists crept in exploiting the situation and we did nothing. we didn't support those who wanted a rule of law. we allowed the saadies and qataris to arm the extremists.

they are trained, they fought in iraq. they are hard-core fighters. if we do not act intelligently, wisely and soon, they will become the dominant force. the obama administration needs to get off the dime and what we need is this. cia operatives on the ground to make sure weapons we supply go to grownups who want a rule of law democracy, not to islamists who want a poor man's saudi avaib yeah. megyn: both the president and the vice president in the debate specifically denied that we have shipped any arm that have wound up in the hands of the terrorists who have tried to exploit the power vacuum. the "new york times" reported that's not true, that we haven't done it directly and that we have been shipping the arms to saudi arabia and other countries like qatar and they have been giving them to the bad guise in

syria. the freedom fightsers, the assad regime and the terrorists trying to he can moisture this fight and maybe do a power grab. but how is coming in now going to work exactly? if we don't put the cia operatives on the ground who will supervise where our arms wind up? >> if we have no grown up western supervision on the ground i wouldn't send a single bullet into syria. it will be funneled by the turks to the islamists. and this is tragic because the inaction while not as bad as clinton's inaction on rwanda. the inaction has empowered our enemies, the people in the middle east. at some time you have got to take a stand. nobody was asking among the syrian freedom fighters. nobody wanted u.s. troops on the

ground. they wanted minimal arms to defend themselves and we outsourced our foreign policy to fundamentalist regimes and they supported the fundamentalists. there is one other issue. the nato air defense patriot batteries going to turkey to defend turkish air space and send a message to assad. that an inside baseball nato issue. and i wouldn't confuse that with giving arms to the syrian rebels. megyn: is there any way of establishing a safe haven any want the viewers to know syria seems so far away it seems like there is a bad guy running it and folks trying to exploit the situation. but the reports are some of these assad forces were going door to door, lining up entire families, shooting little kids in the head in front of their parent and shooting the parent in front of the children. lining them up one by one and watching them kill the families

right in front of them. it's so gruesome and vial. is there anything we can do in terms of establishing a safe haven or something for people to get to? >> certainly there are de facto safe havens across the turkish and jordanian fighter. the horrible fighting around damascus where the massacres are going on. it's hard for the people to get out of there. the fighting is all over the country. so news wanted to put american air power in the air and possibly boots on the ground. the safe haven thing is tough. the best policy is to arm the guy hospital come closest to sharing our values and let them create safe havens by defeating assad. this internet blackout tells you they have got a bunker mentality. they are on the ropes and there is fighting for the airport outside damascus. this regime is going to go down. the problem is if we let it go

down without helping the good guys, the fundamentalist extremists will be the guys with the good weapons who will run the show. megyn: republicans took a big step forward on the immigration issue but it may be for nothing. new headaches in storm ravaged south jersey after this train carrying toxic chemicals plunges off a bridge. hi. i'm henry winkler.

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megyn: emergency teams are on the scene of a frightening situation in south new jersey. folks in three towns forced to stay indoors after this freight train derailed sending several tanker cars into a creek. the cars carrying hazardous materials.

including vinyl chloride, a sweet smelling chemical that causes headaches and crowdiness. >> the idea is to be cautious. the next movement that will cause concern is when conrail decides how to right the cars and pull them out of the water. there is a continued concern about the creek bed itself and how the tide moves. when you see these, the way the cars are wedged. if there were an abrupt movement there could be a compromise of an additional car. >> big news from capitol hill on the issue of immigration. >> the bill is passed. megyn: the house passing a new measure that grants more visas

to foreigners who graduate here with advanced degrees in science, technology, engineering and mathematics. a group of folks who can contribute to our economy, but there is a hitch. >> the house passed the final tally. the effort by republicans to get out in front on the immigration issue. but to do it in a way that support republican values. it would provide 55,000 green cards to immigrant who achieved advance degrees in engineering, science or math. it would allow them to bring their families to the country. but the bill really angered democrats because it would do so at the same time it gets rid of

the green car lottery. one democrat went so far as to accuse this bill of being racist but to a very, very testy exchange. >> that is racist. if not in its intent then certainly in its effect. republicans have just received historically low votes from minorities in the past election yet they want to create an immigration system that gives visas with one hand while taking visas away from minorities with the other. >> i would inquiry if the gentleman's statement about the ugly head of racism was a reference to those of us who authored this bill. >> the chair will not render an advisement opinion. >> i'm not accusing anybody of

racism. >> republicans believe this bill would be a huge nept jobs creator because immigrants with degrees can buy services and goods and employ people. the measure moves on to the democratically controlled senate. it will face a dim future. but republicans are happy to have this on record. it put them out front on the immigration issue in a way that lends itself to their primary objective which is to get the economy rolling. megyn: a heartwarming gift from a new york police officer to a homeless man. tough words from house speaker john boehner about why he says the president's plan to deal with the fiscal crisis is not a serious proposal. up next we'll debate the

strategy behind the president's latest plan. >> most of you know me pretty well. what you see is what you get. while i may be affable and someone that can work with members of both parties which i demonstrated over the 22 years i have been here, i have also am rather determined to solve our spending problem and to solve this looming debt crisis that is about to consume us.

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the muslim brotherhood promised they weren't going to seek the presidency. now they have their guy in there and they are talk about insuring public morality in thize of mr. morsi. the new constitution has to be put to the public for a vote in 30 days. we are hearing new acai sayings

that president obama may not want to reach a deal on the nation's fiscal crisis. some claim the president is intentionally coming to the table with a plan the republicans will reject to damage gop come the next election. democrats are asking the republicans, where are your proposals? here is john boehner and nancy pelosi. >> the republican lead i areship in the house to bring the legislation to the floor next week. megyn: doug schoen cohosts campaign insiders and is a fox news contributor.

charles payne is a fox news contributor and bill mcgurn is a former speech writer for president george w. bush. let me start with you on this, bill. with all due respect to charles you both worked in the white house for the president. what is the president doing? arthur aidala says i'm not allowed to make this gesture. why is he doing that? >> because he may win. my view is there is no fiscal cliff or debt cliff. there is a political cliff and he wants to push the republicans off. the debate is how much do republicans will surrender and then get blamed by their party or how much they won't surrender and get blamed for a recession. i have to say for president obama as bad as it looks it may be a winning hand. >> he's certainly playing the

hand of someone who as he said in his press conference won the election. there is no compromise here. i think there is a fiscal cliff and there is a political cliff. the president has the upper hand. taxes go up in the way his base want on wealthy people and what he wants to do is say if you don't go along with me you republicans are responsible for raising taxes on the middle class and will be responsible for the recession that's almost certain to come. >> there is no serious debating over avoiding the fiscal cliff. it's a political fight. this is a democratic party that hasn't passed a budget in years. the press corps is on the same page. everyone is asking how much of your pledge will you betray? how many people press president obama and say how much

entitlement reform are you putting on the table. megyn: he he's saying there is $400 billion worth of spending cuts we can discuss later if you first give me the tax hikes. what cut are they? we'll see the last budget i proposed that didn't get any democratic support in the senate. he can't get it passed by the democrats. clearly the republicans aren't going to stein on board. >> from an checkpoint of right's disingenuous. the president will win the public relations war by it will be an unmitigated disaster for the poorest people in this country. that initial salvo people are saying is typical negotiations. if this was november 2011 i would say okay. we are talking 30 days from now and dramatic tax increases. we are talking about the defense spending cuts and again listen,

presidents have been fooled by this. ronald reagan was fooled by it. megyn: ronald reagan agreed to i'll do a tax hike now and you give me the spending cuts later and he never got the spending cuts. >> maybe the republicans will lose the republic relations battle but at some point you will draw a line in the sand. if there aren't spending cuts and adjustments to entitlements i don't think a bill is going to get done. you sort of brace for the worst. as far as the stock market is concerned. the market is calm but businesses are giving away money left and right. there are companies with no dividends putting up special dividends left and right. megyn: the president wants to go back to the tax rates we had under president clinton. the middle class is about to go back to the tax rates we had

under president clinton. charles crowd hammer says president obama likes those tax rates so much let's let him live with them for everybody. >> what he will say is i wanted to do legislation to exempt the middle class, but the republicans wouldn't give me the bill. he is prepared, megyn, bluntly to sacrifice the interest of the larger whole to win a political fight. when i was working for clinton we did a deal with gingrich. there was never ever a sense that we would put politics ahead of getting a balanced budget. we got it, we won the election and this president is putting politics ahead of everything. megyn: if republicans give president obama the tax rates on the rich what do they have to negotiate with? why would they do it? >> i think president obama has

the winning hand. >> he does. >> i'm not sure in the long term -- if there is a recession, either there won't be a recession or there will and the republicans will get the blame. that's and high wire act to do at this point. it's very risky from this kind of elect to take this. he could get 85% of what he wanted -- >> he's also gambling on one thing. the republicans won't embrace bowlbowles-simpson and say we ha credible alternative. megyn: if they have the game of chicken and nobody blinks and we go off the cliff on january 1 how much time do we have before the economy starts doing this? >> the stock market will react first. that will and disaster and the pain will become excruiating. think of a snowball going down a

mountain. january 2, if we don't wake up in a world of hurt, but by next december we are all devastated. megyn: if we go off the cliff and then the president goes to the republicans and the taxes have gown on everybody, say now you have to agree to lower the tax rates at least on the middle class. can he extend that leading three weeks fox news channel january we don't feel anything? >> i think people need to remember after that debt ceiling debate of last year. the agreement was made and two days later the stock market crashed because s & p downgrade us. ultimately i think that will be the bill where they just push it off. megyn: they did that twice before and it got us here. one new york city police officer

showing america why we call them new york's finest. in one of his first interviews we'll tell you what he said. four women have gone to court -- these are veterans, these are folks -- a couple of them won purple hearts in combat. they want to change the rules of combat forever in the courts because they have had no success doing it elsewhere. but should this battle be fought in the halls of justice? [ male announcer ] where do you turn for legal matters? maybe you want to incorporate a business. orrotect your family with a will or living trust. and you'd like the help of an attorney. at legalzoom a legal plan attorney is available in most states with every personalized document to answer questions. get started at legalzoom.com today. and now you're protected. as part of a heart healthy diet. that's true. ...but you still have to go to the gym. ♪ the one and only, cheerios

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megyn: "kelly's court" is back in session. the fight to allow women to fight in combat roles. the pentagon says it cannot comment on the current case and while the says it is working on a solution, some of the women filing the lawsuit says that

doesn't change the discrimination they feel they suffered so far. >> my gender has never been a factor in accomplishing my unit's mission. >> i would be assigned positions based on my gender rather than my qualifycation or accomplishments. >> it doesn't make sense for the military. megyn: do they have a case? jonna spilbor ... jonna they can serve in combat-related roles. two of the women have purple hearts for flying helicopters. but there are hundreds of thousands of jobs potentially available to men that are not available to women in the military and they say it's a discrimination issue. >> i think they are right.

kudos to them for being so brave. being on the battlefield there is no bigger job for anybody in the military. why not treat this like any other title 7 case. they are women. you can't say because you are a woman you can't do something that a man can do unless there is a bona fide occupational qualification that prevent them from doing it. who better than a judge to make that determination. megyn: in the past when women raised similar challenges courts deferred to congress' authority to regulate armies and said if the congress doesn't think it's right, then we don't interfere. >> i'm going to be in huge trouble with my daughter who has vowed to become the first female navy seal. but i have to tell you that's true. there is lawful discrimination and unlawful discrimination. in this case it's a matter of biology. speed, strength, mobility. if you don't have all those in

an optimum rate then you put yourself sat risk. megyn: they put a universal ban on it. a man or woman who meets the following. lift this many pounds you are in. it's no women. >> the problem is i guess testing individually is not appropriate because you never know what kind of circumstances you are going to be in so they test in general. strength, speed, mobility. and there is the matter -- but pregnancy. would a woman be he can excluded because she is pregnant? does she put another life at risk when she doesn't know she is pregnant? megyn: you treat pregnant women as a special class and not ex commute most women who are not pregnant. >> you would make a different class for the pregnant women. who would argue they couldn't be on the battlefield. women in general are such a small percent of the military.

i believe it's 14%. pregnant women would be a microcosm. it's not just that they want the right to be face to face with the enemy. they want the job advancement that being a combat soldier provides. they are precluded from doing that if they are allowed to be in combat. megyn: how can the pentagon -- how can they have discrimination which is obviously they are treating women differently than men. gays had a similar issue in the military and still do to some extent. how can they right that sort of disparate policy into the law? >> i think you are right as far as the armed servicing about the source of this decision. and it is black and white when you come down to general issues much biology. strength and speed, having to tote around large heavy equipment. megyn: they are going to kill on

that. >> my daughter is going to kill me. but it's what it boils down to. maybe it's the policy that needs to change. jonna is right. the underlying issue is advancement. there has to be another way for women to advance other than combat-based duty. megyn: it's playing out. historically it hasn't gone well. . one phillips' colon health probiotic cap each day helps defend against these digestive issues with three strains of good bacteria. approved! [ female announcer ] live the regular life. phillips'.

megyn: a new york police officer's big heart offering real inspiration this holiday season. this picture has gone viral online. a new york police officer using his own money to buy boots for a homeless, shoeless man on a cold bitter night. a tourist who just happened to be nearby saw the moment and grabtd this picture.

>> reporter: don't you just love this picture? larry deprimo is becoming the face of the holiday spirit. he says he keeps the receipt in his vest to remind him even when things get tough others have it worse. officer deprimo opening his own wallet for the warpest socks and -- the warmest socks and boots he could find. he knelt down to help the man put the socks and boots on his feet. >> he was an elderly gentleman and his hand were shaking. i knelt down and helped him and helped him back up an was on his way. it was a good moment for both of us. >> he did not see us.

he did not see me. he had boots in his hands. i heard him quite clear say i have these all weather boots for you. let's take care of you. the gentleman sat down against the wall. and i'm telling you his face lit up and he smiled. >> reporter: the police commissioner ray kelly giving deprimo special cuff links. >> all i did was buy a pair of boots. but i think the biggest thing is people helping people. that's the biggest thing we can take away from this. >> reporter: after being placed on the nypd facebook page, $30,000 users have liked that. megyn: think of all the bad p.r. cops get from those videos when some of the few act badly.

remember officer deprimo and how he stands for the best of what the nypd and others officers have to offer.